Saudi Arabia’s banks netted more than SR15 billion in the first five months of 2012 as lending continued to pick up and allow them to net one of their highest incomes through the year, according to official data.

At that pace of earnings, analysts expect the full year net profits of the Gulf Kingdom’s 12 commercial banks to exceed SR30 billion and the level could be the highest since the 2006 record income.

Figures by the Saudi Arabian Monetary Agency (SAMA), central bank, showed the banks’ net earnings stood at SR15.43 billion during January-May, an average of more than Srthree billion a month.

The report showed the banks earned SR3.46 billion in January, SR3.1 billion in February and SR2.6 billion in March, a quarterly income of nearly SR9.3 billion. The profits stood at around 3.1 billion in April and nearly SR2.9 billion in May.

Experts said the high earnings were a result of a surge in domestic credit as banks are slowing down their bad debt provision build up and taking advantage of an upswing in the economy and in public sector projects.

The surge in credit followed a sharp slowdown in previous years in the wake of the 2008 global fiscal distress and debt default by two Saudi family businesses.

Slackening domestic credit allied with a surge in provisions to trim Saudi banks’ net profits to around SR26.8 billion in 2009 from SR29.9 billion in 2008. Profits again slipped to SR26.1 billion in 2010 before bouncing up to SR30.9 billion in 2011, their highest level since 2006 and the second highest in banks’ history.

SAMA’s figures showed banks’ claims on the private sector swelled by 12.9 per cent year/on/year in May against 10.5 per cent in the previous period. Lending grew by about 5.5 per cent in 2010 and remained stagnant in 2009.

In the first five months of 2012, claims on the private sector swelled by 6.7 per cent while month-on-month growth was around 1.2 per cent.

Recovering credit allied with higher commission and investment return to boost Saudi banks’ net profits by nearly 18 per cent to around SR30.9 billion in 2011 from nearly SR26.1 billion in 2010.

The surge marked a return to profit growth by the banking sector in the largest Arab economy after a decline in the previous four years.

Saudi Arabia’s banks netted their highest profits of SR34.6 billion in 2006 before the income slumped to SR30.2 billion in 2007.

During the two years that followed the domestic default crisis, Saudi banks chopped off a large part of their income to build up provisions against non-performing loans, with an estimated allocation of nearly SR20.4 billion.

Saudi banks have the second largest asset base in the Arab region after UAE banks, with their combined assets standing at SR1.59 trillion (Dh1.58 trillion) at the end of February against about Dh1.74 trillion for UAE banks in April.